The European single currency hit a four-month high against the dollar on Wednesday as rising economic confidence on financial markets encouraged investors to switch away from the safe-haven US currency. The euro was changing hands at 1.3770 dollars compared to 1.3634 in late trading on Tuesday.
The euro also gained against the Japanese yen, rising to 131.27 yen late in London in compared to 130.84 yen on Tuesday. The dollar meanwhile fell to 95.39 yen from 95.97 yen.
In London trade on Wednesday, the euro was changing hands at 1.3770 dollars against 1.3634 dollars late on Tuesday, at 131.27 yen (130.84), 0.8778 pounds (0.8807) and 1.5143 Swiss francs (1.5122). The dollar stood at 95.39 yen (95.97) and 1.0982 Swiss francs (1.1091). The pound was at 1.5692 dollars (1.5478). On the London Bullion Market, the price of gold rose to 939.50 dollars an ounce from 924.75 dollars late on Tuesday.-
The price movements showed less aversion to risk on currency markets - a trend that tends to favour currencies such as the euro, which are seen as more risky, over safer bets in troubled times such as the dollar, economists said. "Risk aversion is still the main driver for EUR-USD," analysts at Germany's Commerzbank said in a research note.
Earlier Wednesday, the euro reached 1.3795 dollars - its highest since January 8 - after an announcement by US Treasury Secretary Timothy Geithner that a new plan to buy up "toxic assets" from banks will be in place shortly.
The programme was announced in March by the administration of President Barack Obama to buy up assets from soured real estate investments that remain on bank balance sheets, making it difficult for the institutions to expand lending.
The European single currency was also buoyed up by another piece of positive news for the global economy - the successful sale on Tuesday of 13.5 billion dollars (9.8 billion euros) in common stock by under-pressure Bank of America.
The last major jump in the euro rate against the dollar was on March 18, when the US Federal Reserve calmed financial markets by announcing massive intervention including "quantitative easing" to boost lending. The yen held up despite news that the Japanese economy shrank at a record pace in the first quarter. The figures were seen as better than expected and were also taken to signal that the economy had probably touched bottom.
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